30 May 2025 External T.I. 2022-0931461E5 - Deductibility of contributions to an RCA

Please note that the following document, although believed to be correct at the time of issue, may not represent the current position of the CRA.
Prenez note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle de l'ARC.

Principal Issues: Does paragraph 60(t) permit a taxpayer to deduct an amount for a return of non-deductible contributions paid out of an RCA where the contributions to the RCA were made by someone other than the taxpayer?

Position: No.

Reasons: Legislation.

XXXXXXXXXX									2022-093146
K. Mikelsons

May 30, 2025

Dear XXXXXXXXXX:

Re: Deductibility of contributions to an RCA

We are writing in response to your email to XXXXXXXXXX dated March 23, 2022, regarding the deductibility of contributions to a retirement compensation arrangement (“RCA”). In particular, you asked whether a member’s contributions to an RCA that were not deductible under paragraph 8(1)(m.2) of the Income Tax Act (footnote 1) (the “non-deductible contributions”) are deductible under paragraph 60(t) by the member’s surviving spouse, or other beneficiary, who received such amounts after the member’s death from the RCA and included these amounts in income under paragraph 56(1)(z) or subsection 70(3). We apologize for the delay in our response.

Our comments

This technical interpretation provides general comments about the provisions of the Income Tax Act (the “Act”) and related legislation (where referenced). It does not confirm the income tax treatment of a particular situation involving a specific taxpayer but is intended to assist you in making that determination. The income tax treatment of particular transactions proposed by a specific taxpayer will only be confirmed by this Directorate in the context of an advance income tax ruling request submitted in the manner set out in Information Circular IC70-6R12, Advance Income Tax Rulings and Technical Interpretations.

In very general terms, paragraph 60(t) provides for a deduction to offset amounts in respect of a particular RCA that a taxpayer is required to include in income under paragraph 56(1)(x) or (z) or subsection 70(2) . The deduction is generally limited to the amounts of a taxpayer’s non-deductible contributions to a particular RCA plus the amounts paid or received by the taxpayer to acquire or dispose of an interest in a particular RCA.

In our view the deduction for amounts that are a return of non-deductible contributions from a particular RCA is only available under paragraph 60(t) to the taxpayer who made the contributions to the RCA and provided that the taxpayer included the amounts in income under paragraph 56(1)(x) or (z), or subsection 70(2). As such, in the scenario you provided the member’s surviving spouse, or other beneficiary, who received amounts after the member’s death from the RCA that are a return of the deceased RCA member’s non-deductible contributions is not able to claim a deduction under paragraph 60(t).

We trust our comments will be of assistance.

Yours truly,

Irina Schnitzer
Section Manager
for Director
Financial Industries and Trusts Division
Income Tax Rulings Directorate
Legislative Policy and Regulatory Affairs Branch

FOOTNOTES

Note to reader: Because of our system requirements, the footnotes contained in the original document are shown below instead:

1 Unless specified otherwise, all legislative references herein are to provisions or parts of the Income Tax Act (Canada), R.S.C. 1985 (5th Supp.) c. 1, as amended to the date hereof (the “Act”) and the Income Tax Regulations.